Quick answer
A DSCR loan is an investor mortgage that qualifies a rental property on its debt service coverage ratio — the monthly rent divided by the full monthly payment of principal, interest, taxes, insurance and any association dues (PITIA) — instead of on the borrower’s personal income.
Key facts
75%
Share of rent a conventional loan counts, for comparison
Fannie Mae Selling Guide B3-3.8-02 · Sep 2, 2026
Working out the ratio
A $400,000 rental with 25% down
Loan $300,000 at 7.24%: principal and interest $2,044, plus taxes about $297 at 0.89% and insurance about $163 — a PITIA of $2,504. With rent of $3,000, the DSCR is $3,000 ÷ $2,504 = 1.20.
A ratio of 1.00 means the rent exactly covers the payment; below 1.00 you make up the gap yourself. Each lender sets its own minimum ratio, down payment and rate — there is no federal or Fannie Mae standard for these loans. By comparison, a conventional investment loan counts 75% of the rent ($2,250 here) and also looks at your income.
Why the rules vary
Credit to buy or improve rental property you won’t live in counts as business-purpose credit under Regulation Z, so consumer protections such as the ability-to-repay rule and the Loan Estimate don’t apply. That is why DSCR loans are often grouped with non-QM loans, and why reading the note for prepayment penalties matters. See the DSCR loans guide and second home vs investment property.
Related terms
Sources
- Freddie Mac Primary Mortgage Market Survey — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- US Census Bureau, American Community Survey 2024 1-year — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year)
- Freddie Mac Research — Average homeowners insurance premium per $1,000 of home value (2023 data)
- Fannie Mae Selling Guide B3-3.8-02 — Fannie Mae: share of gross monthly rent counted as net rental income (subject property) (Sep 2, 2026)
- Fannie Mae Eligibility Matrix — Fannie Mae maximum LTV, one-unit investment property purchase (Apr 1, 2026)
- CFPB: Official interpretation of 1026.3 (business-purpose rental property)
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.